Three-year collective agreement for industry: Focus on security, flexibility and retaining competitive strength
After 24 hours of unbroken final negotiations, the Confederation of Danish Industry (DI) and the Central Organisation of Industrial Employees in Denmark (CO-industri) announced on Sunday, 9 February, that they had reached an agreement on a three-year renewal of the collective agreements for industry. According to the Director General of DI, Lars Sandahl Sørensen, the parties have reached a responsible collective agreement focused on security, flexibility and competitive strength.
“This conciliation is the result of tough negotiations. We were met with high expectations from the employees. However, we insisted on not compromising the competitive strength of Danish businesses. With today’s agreement, I am confident that we have laid the groundwork for striking this balance,” said Director General of DI, Lars Sandahl Sørensen.
The new agreement introduces amendments to the rules on parental leave. The period of leave with full pay is extended from a total of 13 weeks to 16 weeks. Eight of these weeks will be earmarked for the father.
“We have agreed on a quite significant amendment of the rules on maternity/paternity leave, securing fathers eight weeks’ parental leave with pay in future – that’s three weeks more than today. As a result, I can confidently say that we, the two sides of industry, are staying up to date and taking part in ensuring a more equal distribution of the leave,” said Lars Sandahl Sørensen.
Among other new elements of the agreement, the contribution to the so-called optional pay account will be increased from 4% to 7% over the term of the collective agreement. This gives the individual employee more flexibility in choosing between time off, pay or higher pension contributions. At the same time, the parties have agreed on ensuring modernisation and greater awareness in the individual businesses about the optional pay account and the choices available. It is also the intention to use the term of the collective agreement to make the optional pay account easier to manage for employees and employers alike.
“The agreement provides for an increase in the part of the pay which is paid into the optional pay account; money the employee may elect to convert directly into pay, time off or pension contributions. On the other hand, it was very important for us to highlight the benefits and value of the account. The key words are a bit more security for the employees – and a bit more flexibility for the employers,” said the Director General of DI.
In a number of respects, the collective agreement improves the conditions for employees retiring from the labour market. The pension scheme is extended to include young apprentices and trainees as well. Employees choosing to continue working after they have reached state pension age may elect to have their pension contributions disbursed as pay.
“The collective agreement provides better pension cover for young employees. At the same time, many elderly employees staying in their jobs after having reached state pension age may elect to have their pension contributions disbursed as pay instead. I am pleased to announce that we have agreed on improving the supplementary training options for employees made redundant. It is obviously also of great importance to us as employers to ensure a smooth re-employment process for the employees,” said Lars Sandahl Sørensen.
The Industrial Agreement and the Collective Agreement for Salaried Employees in Industry, which act as ground-breaking collective agreements in the minimum wage area, cover more than 6,000 businesses and 230,000 employees.
Photos from the press briefing are available from DI on request.
Key elements of the agreement between CO-industri and DI on a new three-year collective agreement applicable from 1 March 2020 to 1 March 2023
Higher pay and contributions to the optional pay account
The minimum rate will increase by DKK 2.5 per year.
The allowance for staggered hours, shift work, overtime, etc. will increase by 1.6% per year.
The rates for trainees and apprentices will increase by an average of 1.7% per year.
The optional pay account contribution will increase by 1 percentage point per year to total 7% of the employee’s pay as from 1 March 2022.
More earmarked parental leave for fathers
The period of leave with full pay is extended from a total of 13 weeks to 16 weeks. Of the 16 weeks, the mother is entitled to take five weeks’ and the father eight weeks’ leave, while the remaining three weeks of leave may be distributed between the parents.
Improved conditions for employees with long-term illnesses
The period during which employees covered by the Industrial Agreement who are absent due to illness receive pay from their employer is extended from nine weeks to a total of 14 weeks. Moreover, the collective agreement ensures that employees working in shifts and weekend workers who are absent due to illness receive a pay which is better aligned with their normal income during the full 14-week period.
The collective agreement also ensures that full pension contributions are paid when employees receive holiday pay during sickness.
More freedom of choice in respect of pension contributions paid after the employee has reached state pension age
In future, employees choosing to continue working after they have reached state pension age will better be able to have their pension contributions disbursed as pay.
Simpler payroll administration
It will now be possible to transition to monthly disbursement of pay, thereby considerably easing the payroll administration burden in many businesses.
Earlier pension eligibility for trainees and apprentices
In future, trainees and apprentices will be eligible to enrol in a pension scheme as soon as they have reached the age of 18 years and have two months’ seniority.
Competitive pension schemes
The parties will jointly monitor the cost level of corporate pension schemes within the area covered by the collective agreement to ensure that the schemes are competitive.
Moreover, the parties will have a joint focus on ensuring that the pension savings of employees working few hours are not eaten up by administrative costs.
Assessment of other forms of employment
The parties will jointly monitor developments in forms of employment other than normal full-time work in order to assess whether the rules are properly designed.
Improved supplementary training options for employees made redundant
In order to improve the re-employment possibilities of employees made redundant, the parties will request the Danish government and the Danish parliament to enact legislation to ensure that employees made redundant may in future receive financial support for up to five weeks’ relevant training from the Competence Development Fund of Industry (Industriens Kompetenceudviklingsfond) even though they are no longer in employment.
Financial support for training agreed between employer and employee
The right of employees to receive financial support from the Competence Development Fund of Industry for training agreed with the employer has now become a permanent component of the collective agreement. This right was agreed on a trial basis in 2017.
Easier access to the Danish labour market model
In future, employers opting to be covered by a collective agreement by becoming a member of DI, and who do not already have a free-choice scheme, will be able to finance a part of the contribution to the optional pay account under the collective agreement within their existing payroll costs, thereby making it more attractive for new employers to become part of the Danish labour market model.
Simpler and more visible optional pay account
The increase in the optional pay account contribution of 3 percentage points agreed for the term of the collective agreement may be disbursed as an ordinary part of the pay if an employee does not want to use it otherwise. Employees and employers will also have the option of agreeing locally that a greater part of the optional pay account is to be disbursed regularly with the pay. At the same time, the parties will make a joint effort to highlight the benefits and value of the optional pay account and to make it simpler to use for employees and employers alike.
More freedom for families with children
In future, employees will be entitled to an additional day off if their child is ill for more than one day. In addition, employees will be entitled to time off to attend doctor’s appointments with their child. The employee may in both cases choose to have an amount disbursed from the optional pay account in connection with the time off.
Enhanced focus on the green transition
In the upcoming period, the parties’ joint work in the context of TekSam will be focused specifically on supporting the collaboration on the green transition between the management and employees of Danish businesses.
Streamlining the rules on discretionary holidays etc.
The rules of the collective agreement on e.g. holidays, discretionary holidays and the optional pay account will be streamlined to ensure better alignment with the new Holiday Act entering into force on 1 September 2020.
In addition, the collective agreement allows for the employees and management of individual businesses to agree for holidays taken to be counted in hours rather than in days.
Improved possibility of local agreements on standby duty
The local parties of the individual businesses will have better access to agreeing on special rules for employees working on standby duty.
For further information, please contact:
Deputy Director General, Press, Media and Stakeholder Relations, Per Geckler, +45 2949 4434, email@example.com